Varoufakis, of the anti-austerity party Syriza, has secured backing from France for his country's bid to renegotiate its debt during discussions in Paris yesterday, where he began a whistle-stop tour, meeting European counterparts.

"I welcome this opportunity, so soon after the Greek election, to discuss face to face with Yanis Varoufakis the stability of the European economy and how to boost its growth," Osborne said in a short statement prior to the meeting.

The peers' new report identified a number of causes for the UK's fading clout, including an "occasionally unhelpful tone" in dealings with the European Union.

Uncertainty over the Britain's future within the EU and a perception of growing UK antipathy to Brussels are also contributing to problem, the House of Lords EU sub-committee on economic and financial affairs found.

It criticised an "insufficient commitment to the hard graft" of lobbying, negotiation and alliance-building and pointed out that these were areas that EU powerhouse Germany was a master at.

The cross-party committee of peers urged the Government to "act urgently" to bolster the UK's influence and warned failing to halt the decline would be a dereliction of the duty to protect UK interests.

Committee chairman Lord Harrison said: "The committee regrets the fact that the UK's influence over EU financial regulation is diminishing. We urge the Government to do all it can to restore the influence the UK once had in Brussels, and to keep our place at the front and centre of the debate.

"The City of London is a prized asset not only for the UK but for the EU as a whole. Yet the UK, for all its expertise, risks being side-lined. As we say in the report, there can be no excuse for a failure to act."

Meanwhile, a poll found that Conservative party members are overwhelmingly in favour of leaving the European Union. In a survey conducted by ConservativeHome, over half (58%) said they'd back an exit, with only 33% saying they would want to stay part of the political bloc.